A new policy aimed at curbing the number of chain stores
along upper Market Street has not deterred several national retailers from
seeking to open along the main thoroughfare in San Francisco's gay Castro
district.

Both coffee brewer Starbucks and burrito chain Chipotle,
founded by a gay chef, plan to seek permits for prime corner storefronts on
Market despite vocal opposition to their applications. Planning officials had
already stated they plan to recommend both be rejected, even prior to the
adoption last week of the new formula retail guidelines.

As reported online Thursday, April 11 by the Bay Area
Reporter, the Planning Commission
unanimously adopted a new provision requiring planning staff to recommend any
retailer that brings the concentration of chain stores within a 300-foot radius
to 20 percent or greater not be recommended for approval. The policy applies to
the stretch of Market Street between Octavia and Castro.

Retailers in violation of the cap can still seek approval
from the Planning Commission, though projects disapproved by staffers rarely
receive a favorable vote. The wiggle room in the policy is meant to ensure that
chain stores that do have significant community backing can still open along
the retail corridor.

The proposed facade for a new CVS pharmacy on Market
Street(Photo: Courtesy CVS)

One such example of a company facing minimal opposition is
pharmacy chain CVS, which is seeking to open in a large ground floor space at
the Market Noe Center where Tower Records had been located. The company dropped
plans to sell alcohol and has been working with neighborhood leaders and
planners on a new facade for the building in exchange for support of its permit
application.

It is scheduled to go before the Planning Commission May 16.
In another concession to neighborhood groups, it has proposed a see-through
lattice material for a portion of the building fronting Market Street and
unique signage made of white aluminum lettering with red backlit LED lights.

"We want to be good neighbors," said company spokesman
Mike DeAngelis when asked about the design changes CVS has agreed to
incorporate at the site.

If its permit is approved as expected next month,
construction could begin in August with a store opening in early 2014.

A fourth chain, Coffee Bean and Tea Leaf, had announced
plans to open in a corner space attached to Market Street gym Fitness SF. But
planning staff has indicated they do not support seeing the company move into
that storefront, and the owners of the gym are now seeking a different tenant.

"Things are in flux with tenants there so I am not able
to discuss the matter further at this time," gym co-owner Sebastyen
Jackovics told the B.A.R. this week.
"Our goal there is to bring a compelling and exciting retail experience
that works well for the neighborhood and the gym use and can be sustained."

With roughly a dozen new mixed-use buildings under
construction or proposed for upper Market, most located on prominent
intersections, residents and local merchants have expressed alarms that only chain
stores would be able to afford the new retail spaces in those buildings.
Already Whole Foods and Bank of the West have secured leases and permits to
open in two of the projects.

Backers of the new policy, which the Duboce Triangle
Neighborhood Association helped craft, hope it will lead landlords of the new
buildings as well as existing ones with vacant storefronts to seek out
locally-owned stores rather than national retailers.

"This slows down the process long enough to potentially
get some of the local merchants in there and a chance at finding some balance
of creating a vibrant local neighborhood with character instead of giving away
the whole farm," Wendy Mogg, a co-owner of Market Street pastry shop Sweet
Inspiration and a leader of the coalition working to defeat Starbucks'
expansion plans. "Starbucks was the springboard for organizing the
neighborhood from Octavia to Castro on what can we do to help shape this and
create the neighborhood we want."

Mixed reaction

Reaction to the policy has been mixed. Merchants of Upper
Market and Castro President Terry Asten Bennett, whose family owns Cliff's
Variety, questioned how effective it would be in helping fill vacant
storefronts in the area.

"I think the change is short-sighted and has the
potential to make the vacancy situation even more devastating. There is nothing
about this policy that makes it more desirable for a small business to open up.
However, large vacancies certainly make it less desirable," she told the B.A.R.

She added that she "finds it disturbing that no one
from the planning department or the supervisors office reached out to the
merchants to discuss this policy change."

Planning Department spokeswoman Joanna Linsangan told the B.A.R.
that MUMC was not consulted since the policy does not
impact Castro Street. In addition to DTNA, planning staff met with the Castro/Eureka
Valley Neighborhood Association and the Lower Haight Merchants and Neighbors
Association.

District 8 Supervisor Scott Wiener, who is supportive of the
policy, said his office did mention it to MUMC.

"It is not in any way a secret, it was quite
public," he said. "Ultimately, it was a decision for the Planning Commission,
the planning department, and its staff."

Due to the possibility that appeals of any permit denials
could come before the supervisors, Wiener declined to discuss specific
retailers' applications.

Mogg, who sits on the board of the Castro/Upper Market
Community Benefit District, is hopeful the policy will lead to more dialogue
about what kinds of retail would be welcomed along one of the city's main
retail corridors.

"I do think this is an absolutely critical moment for
neighbors, merchants, or anyone interested in the neighborhood to be engaged in
these questions, whatever their opinions are of what should come in," she
said. "We have an opportunity over the next two years to influence the way
we want the neighborhood to be for a long time."

The first test of the new rules is expected to come
Thursday, May 9 when Starbucks goes before the Planning Commission to seek a
conditional use permit to open a new store at 2201 Market Street at Sanchez.
The Seattle-based company announced in 2011 plans to move into the space.

Technically, it would be its fourth Castro location, as it
has stand-alone stores on 18th Street and in the Safeway shopping plaza, as
well as a kiosk inside the grocery store. But company officials have said they
need additional stores to handle customer demand.

The 18th Street store, which attracts such a hirsute crowd
it has been dubbed Bearbucks, is particularly cramped, even after a recent
redesign of the space.

Company spokesman Zach Hutson was out of the office this
week and unable to comment. Danny Cowan, a spokesman for Starbucks who works at the public relations firm Edelman,
confirmed with the B.A.R. that Starbucks
has no plans to abandon the corner space on Market Street and will seek
approval for the new store.

Cowan added that Starbucks has "received significant support" from residents in the area and MUMC. A petition against the chain, however, has attracted more than 5,000 signatures.

Linsangan confirmed this week that the location "will
be impacted" by the new formula retail policy and that staff is
recommending it not be approved.

Mogg, who is helping to coordinate rallies for opponents of
the coffee chain on the day of the hearing, said having formula retailers at
prominent intersections along upper Market would brand the area more as a
"strip mall" than a local neighborhood.

As for Chipotle, which wants to open at the old Home
restaurant location at the corner of Market and Church streets, it is expected
to go before the Planning Commission in June. Linsangan said planning staff has
yet to determine if it triggers the new policy and should be recommended for
disapproval.

Both foes of the store and the company have launched online
efforts to drum up support. In an email this week, company spokesman Chris
Arnold acknowledged the hurdles the Mexican fast food chain is facing in
securing its permits.

Nonetheless, the company is "looking forward" to
making its case for why it would benefit the Castro, wrote Arnold.

"We recognize that there is some opposition to this
project (and to formula retail in general), but there's also been strong
support for what we are looking to do there," he wrote. "All we're
asking for is a fair shake."